TOPDANMARK Q1 2018 RESULT
Highlights Q1 2018 Post-tax profit: DKK 267m (Q1 2017: DKK 415m) CR: 85.2 (Q1 2017: 85.8) CR excl. run-off: 88.0 (Q1 2017: 89.0) Premium growth: 1.7% increase in non-life and 18.6% in life insurance Profit in life insurance: DKK 44m (Q1 2017: DKK 72m) Investment return: DKK 19m loss (Q1 2017: DKK 152m) Profit forecast model for 2018 Topdanmark still expects a positive premium growth in non-life For the full year 2018, the assumed CR improves from 90-91 to 88-89 excl. run-off in Q2-Q4 2018 Still incl. additional expenses of 0.5-1pp due to the investment in increased digitalisation and automation Profit forecast model for 2018 adjusted by DKK 100m to DKK 1,050-1,150m excl. run-off in Q2-Q4 2018 2
Trend in pre-tax result Q1 2017-Q1 2018 534 19 166 28 15 344 Q1 2017 Technical result Investment return (non-life) Life Parent company etc. Q1 2018 3
Claims trend excl. run-off, weather and large-scale claims Claims trend Full year Q1 Q1 2017 2017 2018 Claims trend 65.8 68.5 67.9 Run-off 3.8 3.2 2.7 Weather-related claims (0.4) 0.0 0.0 Large-scale claims (0.2) (0.1) (0.4) Claims before run-off, weather and large-scale claims 69.1 71.6 70.2 4
Trend in premiums (%) 2017-2018 3.0 1.5 0.0 2.5 0.4 2.0 1.5 0.5 1.7 1.2 1.0 0.5 0.0 SME and Agricultural Personal Motor Illness/accident-defection (Sydbank) One-off effects in Q1 2017 Trend in premiums 5
Assumed CR adjusted from 90-91 to 88-89 for 2018 Excl. run-off in Q2-Q4 90-91 1) 0.6 0.7 0.2 0.2 0.3 88-89 Assumed CR for 2018 in annual report for 2017 excl. run-off Weather Run-off Large-scale claims Discounting Better than assumed claims trend in Q1 2018 Assumed CR for 2018 excl. run-off in Q2-Q4 Assumptions for CR in 2018 A normal year for weather with weather-related claims of DKK 120m in Q2-Q4 A level of interest rates corresponding to the interest rate curve on 28 March 2018 An expense ratio of around 16 1) Incl. additional expenses of 0.5-1pp due to an update in investments in digitalisation and automation 6
Cooperation agreement with Coop Coop is the largest supermarket chain in Denmark counting 1,750,000 customers >800,000 customers use the Coop app Digital set-up Simple, modular products Competitive prices Digital first in Sales, Service and Claims handling Push strategy insurances must be sold Fully integrated with Coop s bonus scheme for members Launch Soft launch of Coop motor insurances in April 2018 Other products to be launched later Contents, accident, house etc. 7
Result Life insurance Result of life insurance Full year Q1 Q1 (DKKm ) 2017 2017 2018 Investment return on shareholders' equity 109 39 24 Sales and administration (25) (10) (10) Insurance risk 17 5 (7) Risk return on shareholders' equity 147 37 37 Profit on life insurance 249 72 44 8
Prospects for life insurance 2018 Assumed growth has improved from around 5% loss to slightly positive Despite the termination of the distribution agreement with Sydbank Assumptions: Full recognition as income of risk return No recognition as income from shadow account Assumed pre-tax result for 2018 continues to be DKK 240-270m 9
Investment return for the Topdanmark Group excl. Life insurance Investment return Portfolio 31 March 2017 2018 (DKKbn) Return Q1 2017 Return Q1 2018 (DKKm ) % (DKKm ) % Danish equities 0.3 0.3 26 8.7 (1) (0.2) Foreign equities 0.6 0.7 35 5.7 (24) (3.5) Unlisted equities and hedge funds 0.3 0.3 16 5.1 3 0.7 Government and mortgage bonds 12.0 13.6 17 0.1 (14) (0.1) Credit bonds 0.1 0.0 5 2.7 (1) (1.2) Index linked bonds 0.4 0.3 6 1.6 0 0.1 CDOs 0.6 0.6 25 4.5 14 2.4 Properties 1.0 1.1 13 1.3 12 1.1 Assets related to I/A 2.5 2.6 3 0.1 (6) (0.2) Money market etc. 4.1 3.9 (3) (0.1) (2) (0.1) Subordinated loan capital (1.8) (1.7) (11) (0.6) (12) (0.7) Interest-bearing debt (0.3) 0.0 (2) (1.3) 0 0.0 20.0 21.6 130 0.7 (29) (0.1) Asset management 35 27 Investment return 165 (2) Return and revaluations of non-life insurance provisions (13) (18) Investment return after return and revaluations of non-life insurance provisions 152 (19) The exposure in foreign equities and credit bonds has been adjusted by the use of derivatives. The return percentages are calculated as the ratio between the return on financial instruments and the size of the exposure of the underlying asset. The return on properties includes revaluation of owner-occupied property, which has been included in other comprehensive income. 10
Profit forecast model for 2018 Profit forecast 2018 Results (DKKm) 2017 Forecast 2018 31 Decem ber 2017 Forecast 2018 31 March 2018 Non-life insurance - Technical result 1,622 850 900 1,000 1,050 - Investment return after return and revaluations of non-life insurance provisions etc. 288 100 150 50 100 Profit on non-life insurance 1,909 950 1,050 1,050 1,150 Life insurance 249 240 270 240 270 Parent company etc. 77 40 50 40 50 Pre-tax profit 2,235 1,230 1,370 1,330 1,470 Taxation (502) (280) (320) (280) (320) Profit for the year 1,733 950 1,050 1,050 1,150 11